SHLDQ - Sears Holdings Corp

[CorpRaider]

I saw the sand crawler from star wars episode 1 (4 now?).  It looks weird in miami but at least they added a new paint job. 

 

Man the thing is right there on the home page on his website now.  With the slogan "rethinking thinking inside the box."  You have to check it out:  http://www.fairholmefunds.com

 

 

[adesigar]

Not exactly emphatic is it.  Wow his new site is disturbingly slick for a value investor, especially with mostly closed funds.

 

If you think that's bad have you seen the building he's putting together in Miami? http://www.miamiherald.com/news/local/community/miami-dade/midtown/article2684594.html

 

The Miami news is saying the tower is flashy even for Miami, that says something right there.  It will include a private art museum to house his collection.

 

What does value investing have to do with how you spend it? Does everyone have to live like Warren Buffett to be a value investor? People on this board have more expensive homes than Buffett. Here is Charlie Mungers Catamaran http://channelcatcharters.com/ Does that mean hes not a value investor ?

[merkhet]

Not exactly emphatic is it.  Wow his new site is disturbingly slick for a value investor, especially with mostly closed funds.

 

If you think that's bad have you seen the building he's putting together in Miami? http://www.miamiherald.com/news/local/community/miami-dade/midtown/article2684594.html

 

The Miami news is saying the tower is flashy even for Miami, that says something right there.  It will include a private art museum to house his collection.

 

What does value investing have to do with how you spend it? Does everyone have to live like Warren Buffett to be a value investor? People on this board have more expensive homes than Buffett. Here is Charlie Mungers Catamaran http://channelcatcharters.com/ Does that mean hes not a value investor ?

 

That Charlie Munger used to be a great investor, but after he bought his own newspaper, published a book about himself and started showing up on the Forbes list, his investing ability really went down hill...

[CorpRaider]

Charlie's a growth investor.  If he was 30 he would be a silicon valley venture capitalist.  ;D

 

[Jurgis]

Off topic.

 

I like the Fairholme mansion museum office.

 

I ROFL at "rethinking thinking inside the box."  :o

 

No, really.

 

WTF was he thinking

 

But I don't judge his investing abilities based on that.

 

Well, maybe a little.  8)

[dowfin1]

Not exactly emphatic is it.  Wow his new site is disturbingly slick for a value investor, especially with mostly closed funds.

 

If you think that's bad have you seen the building he's putting together in Miami? http://www.miamiherald.com/news/local/community/miami-dade/midtown/article2684594.html

 

The Miami news is saying the tower is flashy even for Miami, that says something right there.  It will include a private art museum to house his collection.

 

What does value investing have to do with how you spend it? Does everyone have to live like Warren Buffett to be a value investor? People on this board have more expensive homes than Buffett. Here is Charlie Mungers Catamaran http://channelcatcharters.com/ Does that mean hes not a value investor ?

 

 

It simply means that he has been and will continue to be busy (maybe preoccupied if he has permit problems) with non-investment matters.  Maybe he has broad capacity, but I prefer guys like Buffett and Burry who are almost focused to a fault. 

[BTShine]

I think that building looks cool.  Beauty is in the eye of the beholder.

[ScottHall]

You would have to account for the long legal battle for the assets held at the holdco if you own the SRAC bonds in bankruptcy.  Your views probably match up with the big drop in CDS spreads but the story changes so quickly who knows what this will look like in 2016 or 2017.

 

The 2019 notes seem easiest to understand the risk on.  It becomes murkier as time goes by and you go down the capital structure.

 

Why do you care about assets at HoldCo if you own the SRACs?

[Picasso]

You would have to account for the long legal battle for the assets held at the holdco if you own the SRAC bonds in bankruptcy.  Your views probably match up with the big drop in CDS spreads but the story changes so quickly who knows what this will look like in 2016 or 2017.

 

The 2019 notes seem easiest to understand the risk on.  It becomes murkier as time goes by and you go down the capital structure.

 

Why do you care about assets at HoldCo if you own the SRACs?

 

I am looking back through the original SRAC prospectus:

 

SEARS ROEBUCK ACCEPTANCE CORP.

 

  SRAC is a wholly-owned subsidiary of Sears and was incorporated in 1956

under the laws of Delaware. Its general offices are located at 3711 Kennett

Pike, Greenville, Delaware 19807 (302/888-3100). SRAC raises funds primarily

from the direct placement of commercial paper with corporate and institutional

investors and through intermediate-term loans, discrete underwritten debt and

medium-term notes. SRAC uses borrowing proceeds to acquire short-term notes of

Sears and purchase outstanding customer receivable balances from Sears. Sears,

which is a multi-line retailer that conducts domestic and international

merchandising operations, uses the funds obtained from SRAC for general

funding purposes. SRAC, and not Sears, will be the sole obligor on the Debt

Securities.

 

You're right, there is really no relation to any assets held at the holdco during bankruptcy.  Based on what others said it seemed like the verbage was more vague in terms of debt held by the subsidiary. 

[ScottHall]

You would have to account for the long legal battle for the assets held at the holdco if you own the SRAC bonds in bankruptcy.  Your views probably match up with the big drop in CDS spreads but the story changes so quickly who knows what this will look like in 2016 or 2017.

 

The 2019 notes seem easiest to understand the risk on.  It becomes murkier as time goes by and you go down the capital structure.

 

Why do you care about assets at HoldCo if you own the SRACs?

 

I am looking back through the original SRAC prospectus:

 

SEARS ROEBUCK ACCEPTANCE CORP.

 

  SRAC is a wholly-owned subsidiary of Sears and was incorporated in 1956

under the laws of Delaware. Its general offices are located at 3711 Kennett

Pike, Greenville, Delaware 19807 (302/888-3100). SRAC raises funds primarily

from the direct placement of commercial paper with corporate and institutional

investors and through intermediate-term loans, discrete underwritten debt and

medium-term notes. SRAC uses borrowing proceeds to acquire short-term notes of

Sears and purchase outstanding customer receivable balances from Sears. Sears,

which is a multi-line retailer that conducts domestic and international

merchandising operations, uses the funds obtained from SRAC for general

funding purposes. SRAC, and not Sears, will be the sole obligor on the Debt

Securities.

 

You're right, there is really no relation to any assets held at the holdco during bankruptcy.  Based on what others said it seemed like the verbage was more vague in terms of debt held by the subsidiary.

 

The SRACs were later amended to be guaranteed by Sears, Roebuck for some regulatory reason. They're not guaranteed by Holdings, though.

 

I wouldn't trust this site in general regarding debt investments. A lot of folks still believe in the guarantor/non-guarantor myth, and I would say most probably have no experience investing in distressed debt. Some do, but they're few in number.

[BTShine]

Kimco bought 67% of 39 malls today from Blackstone. Deal value of about $950 million.  5.6 million square feet.  Values 100% of malls at around $1.450 billion.  About $250 a square foot. 

[tede02]

A friend of mine works in lending.  He shared with me recently that internally, Wal-Mart is expecting foot traffic to decline up to 40% over the next decade (due to the ongoing shift to e-commerce).  I'm sure others have read an article or two about shopping malls going extinct, etc. 

 

I think these shifts are real and will happen, but who knows what the time-frame is.  These trends have to be considered with investments into companies like SHLD or JCP. 

 

I own a bunch of FAIRX so I have exposure to SHLD.  Nonetheless, I still don't understand what Eddie and Bruce are trying to do. 

 

Edit - What I didn't explicitly mention in my original post is my concern over what these trends will do to the value of the real estate holdings of companies like SHLD.  It seems like the entire play on SHLD is the real estate. 

[JAllen]

Wow, as an AMZN holder not even I think foot traffic will decline by 40% in the next decade.  Maybe 2-3% at most?  3% compounded is a -26% drop over a decade.  I would be surprised by that.  Though there is foot traffic and total sales.  My guess is sales will decline greater than foot traffic.

 

 

I'm surprised WMT would share that with anyone if they do actually believe it.

[ni-co]

At our most recent Town Hall meeting with our associates, I explained that I want us to operate our stores both profitably and with excellence. Both, not just one or the other.

 

This is the background behind our decision to close more than 200 Kmart and Sears stores in 2014.

 

[…]

 

[M]any of our stores are in some of the most attractive mall locations in the country. Though we expect most of them to stay open for the foreseeable future, in some places mall owners and developers have approached us with the opportunity to reposition our stores for other uses and are willing to compensate us. When they’ve offered us more money to take over a location than our store there could earn over many, many years, we’ve accepted offers.

 

[…]

 

The good news is that our analyses show that when we close a store we can retain a relationship with Shop Your Way members who visited the store – because we can now communicate with them and meet their needs in other ways on other platforms. As a result, we can keep serving them, whereas in the past, before changes in technology impacted consumer behavior, we might have lost these members forever.

 

http://blog.searsholdings.com/eddie-lampert/moving-forward/

 

Feel free to make your favorite Sears stores joke…

[Luke 532]

http://www.seritage.com/

 

As of 2:30PM (Eastern) today, the website only says "Coming Soon"

 

Perhaps they're just updating their site. Or there's a pending announcement.  Maybe, maybe not.

 

 

[Jurgis]

Feel free to make your favorite Sears stores joke…

 

Sears - a closed store is worth more than an open one.

Sears - the customer satisfaction rises when store closes.

Sears - we can retain a relationship with Shop Your Way members by letting them shop elsewhere. Why would we force them to shop at Sears?

[Luke 532]

Berkowitz buys ~120,000 additional warrants on the open market...

http://www.sec.gov/Archives/edgar/data/1214344/000091957414007013/xslF345X03/p6280483.xml

[wisdom]

http://www.wsj.com/articles/sears-bets-big-on-technology-but-at-the-expense-of-its-stores-1418787001?ru=yahoo?mod=yahoo_itp

 

[Luke 532]

Is something a “failure” if other successes come from it?

http://blog.searsholdings.com/inside-shc/is-something-a-failure-if-other-successes-come-from-it/

[oddballstocks]

fareastwarriors,

 

Brings back memories.  Growing up in Cleveland, OH my parents would take me to the BEST store in the 1980s.  It was a showroom with products on the floor and giant catalogs.  You'd find what you wanted then locate a phone and call in the order from inside the store.  We'd then go up front, pay for our item and wait by a conveyor belt for the merchandise to come out from the back room.

 

I never understood why that was better than a normal store, but we went there for some reason.  We'd buy things like luggage, desk chairs etc.  It was a very strange assortment of items they sold.  I believe they went out of business in the 1990s.  Here is the store: http://en.wikipedia.org/wiki/Best_Products

[adesigar]

Sears Bets Big on Technology, but at the Expense of Its Stores

 

Failure of Mygofer Strategy Shows Retailer’s Struggle to Reinvent Stores

 

 

 

http://www.wsj.com/articles/sears-bets-big-on-technology-but-at-the-expense-of-its-stores-1418787001?mod=WSJ_hp_EditorsPicks

 

Seriously? Someone posted that 2 posts before you.

[cobafdek]

Brings back memories.

 

Here's mine, growing up in north central Ohio, related to BEST, maybe Sears going this business model and fate:

 

http://en.wikipedia.org/wiki/Service_Merchandise

 

P.S.

 

Growing up in Cleveland, OH

 

You a Steelers fan because of losing some IQ points living in Pittsburgh?  Or are you an undercover Browns fan, sporting Steelers merchandise for your own self-protection?

 

 

[Luke 532]

Eddie's response to the WSJ Article

 

http://blog.searsholdings.com/inside-shc/is-something-a-failure-if-other-successes-come-from-it/

 

Just FYI, this was posted already earlier this morning.

[jeffmori7]

Eddie's response to the WSJ Article

 

http://blog.searsholdings.com/inside-shc/is-something-a-failure-if-other-successes-come-from-it/

 

Guys seriously, take the time to at least look at the 10 previous posts. It's becoming annoying to see double post from people not reading at all what has already been posted!

[Picasso]

New blog post from firefighter Eddie:

 

http://blog.searsholdings.com/inside-shc/is-something-a-failure-if-other-successes-come-from-it/

 

In all seriousness, I really liked the article from 1988.  A good reminder why retail is usually such a terrible investment.  You take time and turn it from your friend to your enemy when you make an investment in a retailer. 

 

Interesting to note the real estate estimates in 1988 versus today.